Microsoft's Ballmer Bets Big On Cloud, Mobility; Partners Want In

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Steve Ballmer is fired up. The Microsoft CEO has just come offstage after speaking to 16,000 Worldwide Partner Conference attendees at the Air Canada Centre, home of the Toronto Maple Leafs, and he is talking about a new, more competitive Microsoft. It is a Microsoft more in line with Ballmer's hard-checking, hypercompetitive style. It is a Microsoft playing offense, willing to do what it takes to win as it moves to stop Apple--or anyone else, for that matter-- from wresting away its crown as the undisputed world leader in bringing personal computing to the masses.

Ballmer is now backstage at the Air Canada Centre in a private room with CRN, shouting and stretching out the word "any" in a rising crescendo to make a point--loudly and clearly--that Microsoft will not cede any market segment to Apple even if that means stepping on the toes of longtime hardware partners with its own Surface tablet.

"We are not going to let annyyyyyyyyyyyyy piece of this [go uncontested to Apple]," he bellowed in our exclusive interview. "Not the consumer cloud. Not hardware/software innovation. We are not leaving any of that to Apple by itself. Not going to happen! Not on our watch!"

There is something primal about Ballmer's anti-Apple diatribe. Think Microsoft vs. Apple circa 1980 when Ballmer was hired as the first business manager at Microsoft by co-founder and Chairman Bill Gates. Apple may have pioneered the home computing market with the Apple II, but Gates and Ballmer brought PCs to the masses. Yet today, Apple's iPad and iPhone are winning the computing war, and Apple's market capitalization of about $560 billion is more than double that of Microsoft's $240 billion.

In addition, Microsoft just reported its first quarterly loss as a public company after taking a previously announced $6.2 billion write-down for the 2007 acquisition of online advertising company aQuantive. In the fourth quarter ended June 30, Microsoft reported revenue of $18.1 billion, up 4 percent from $17.4 billion in the fourth quarter of fiscal 2011. Its $492 million loss, due to the online advertising charge, compared to earnings of $5.9 billion in the same period one year earlier.

Meanwhile, Apple, Cupertino, Calif., now holds anywhere from 60 percent to 70 percent of the tablet market, according to market researchers, with an installed base of 55 million and more than a half-million apps in its App Store. Microsoft and its hardware OEM partners are barely a blip on the screen. What's more, market researcher Gartner forecasts that 55 percent of the 182.5 million tablet computers it expects to be sold in 2013 will be Apple iPads, while only 8 percent will be running Windows.

A onetime channel antagonist, Apple also is now putting on a full-court channel press, led by former 12-year Microsoft veteran Francois Daumard, who is courting solution providers to sell, integrate and support the iPad. Microsoft, in contrast, has angered more than a few partners by refusing to let them sell the Surface tablet, slated to ship in October. After the Surface launch last month a number of solution providers told CRN they viewed that decision as a case of Microsoft doing an end-run around the channel.

Under criticism by some for the inroads Apple has made, Ballmer acknowledged that Microsoft and its partners have ceded some of the "boundary between hardware and software innovation" to Apple, which he refers to as "the other guys, the guys I don't like."

Doron Kempel says selling hyper-convergence can be challenging for solution providers, but success will come from taking business from competitors that are unprepared or hesitant to embrace the technology.